How to Use Venmo for Your Small Business

Venmo launched its business and commerce platform in 2020 and gained 1.5 million business profiles in just the first year. Today, it has over 83 million users in total. With the rise of digital wallets skyrocketing, PayPal (Venmo's parent company) says having a business profile can lead to increased unplanned purchases by consumers, and it can also help win over the nearly 50% of shoppers who abandon their purchases at outlets that do not accept digital wallets.

Is having a Venmo for Business right for you? We'll find out. We'll also explain how you can get a business profile set up and start accepting Venmo payments right away.

Venmo for Small Business

In 2022, PayPal conducted research into how their Venmo platform supports businesses. Notably, they found that businesses offering Venmo payments significantly increased their conversions. They also discovered that small businesses often prefer using Venmo due to the ease of setting up, managing, and growing their sales.

Getting started with Venmo for Business is a straightforward process that can be done completely on your mobile device. While it won't take much of your time, it can have a major impact on your business. But you might need additional guidance to decide whether or not it's right for you. Read on for all the details and step-by-step instructions to get started.

Key Features of Venmo for Business

Venmo is a contactless payment platform that provides users with a digital wallet they can use for peer-to-peer payments and, now, for making purchases from business profiles. If your goal is to operate a cashless business, Venmo is a great step forward. As digital privacy and cybersecurity grow ever stronger, digital wallets can provide a safe and reliable way to make purchases, which many consumers prefer.

Using Venmo is a fresh and effective way to grow your business and offer options that your customers will appreciate — all at a low cost to you.

Pros of Using Venmo for Your Small Business

Venmo for Business is a great choice for many small businesses and entrepreneurs, primarily for the reasons listed below:

Easy Separation of Personal and Business Finances

The cornerstone of a successful business is the separation of personal and business finances — but for many single owners, entrepreneurs, sole proprietors, and home-based business owners, this can be a challenge. Thankfully, Venmo for Business takes out the guesswork. You're required to have a personal Venmo account before you begin, and once you get your business profile, you can easily toggle back and forth between them. This gives you greater control and ease in how you manage your finances, and it also gives you one centralized spot to stay on top of both.

Lower Transaction Fees

Venmo's business user fees are lower than many competing platforms, such as Square and Stripe. For every purchase made, the seller will pay a transaction fee of 1.9% + $0.10. This fee is automatically taken by Venmo when a purchase is made, and the remaining amount goes directly into your business account.

No Need for POS Equipment

Because every Venmo transaction takes place via a mobile device (yours and/or the consumer's), you won't need anything else to accept payments anytime, anywhere. This means you can have a point-of-sale at a set location or take it on the go. It's a great option for pop-up shops, food trucks, traveling boutiques, and much more.

Social Sharing Component

Social commerce is a growing trend, and Venmo is one of the leading platforms for community sharing. Venmo users are connected to their peer network on the app, so whenever users make a purchase, the seller's name is displayed on their feed, which is then visible to all of their connections. That means when they purchase from you, your name and profile picture will appear on the devices of everyone in their network, snagging you some free word-of-mouth advertising.

Contactless Payment

It's the way of the future. The need for contactless payment has been around for a long time, but it rose to greater prominence during the pandemic. Now, your customers can quickly scan a QR code and be taken to your Venmo business profile for immediate payment. No exchanging of credit cards — or germs — required.

Cons of Using Venmo for Your Small Business

With all those perks, why wouldn't a small business choose to use Venmo? Like all things, the platform comes with a few downsides. Most of them are easily manageable, but it's best to be aware so you can make the right choice for your specific business.

Transaction Limits

Venmo does have limits on how much you can pay from your profile or transfer out of your profile into your bank account. This means Venmo may not be the best choice for high-volume businesses. As a business profile holder, you can only pay $2,999.99 in a single transaction, up to $24,999.99 per week. There are restrictions on how much you can transfer as well, at a limit of $49,999.99 per week. Transfers over $999.99 will require identity verification.

Higher Fees for Online and App Purchases

If you want to provide Venmo as a payment option on your own website or within your own app, you can certainly do that, but the fees will increase considerably. To use Venmo in this way, you'll pay a 3.49% + $0.49 transaction fee. However, it can also be useful to attract customers who prefer to use Venmo as a payment method.

Customers Must Have Venmo Accounts

This may or may not be an issue, depending on your business and your customers. Anyone paying you via Venmo will need to have their own personal account set up. Most Venmo users are under the age of 35, so it may not be the best avenue for a business whose primary demographic is 50+. It can also be limiting if this is the only way to pay your business for goods or services, as many customers may prefer another payment platform.

Seller Is Responsible for Sales Tax

Venmo does not automatically calculate or gather sales tax, so if you're in a state where you have to pay sales tax, you'll be on the hook for it. Be sure you understand your obligations for paying sales tax, and know how much and how to collect it so you're ready when it's time to file business taxes.

How to Set Up Venmo for Your Small Business

Ready to set up Venmo for Business? Here's what you need to do to get started:

Create a Personal Venmo Account

If you don't already have one, begin by creating a personal Venmo account — it's free and only takes a few minutes.

Add Your Bank Account

Next, link your personal bank account. Once you do, you'll be able to send and request money from your peer network.

Link a New Business Profile

Via your personal Venmo account, select "Business Profile" from the drop-down menu, and start creating your account. Venmo may send you a one-time passcode to verify your identity. You'll go through the setup process, in which you'll be asked to provide certain information, including:

• Your Social Security number or your business EIN
• The name of your business
• Your business address (this will not be visible in your profile)
• A profile picture and background image
• Your business category and a description of the business
• Optional information, like public contact details and social media profiles

Once you've put in all your information, you're ready to go. Venmo will verify your account, and you can start collecting payment and transferring right away.

Create QR Codes for Payment

One of the easiest ways to allow for contactless payment for your customers is to enable QR codes. These scannable codes automatically link to your Venmo business profile so buyers can scan and pay instantaneously. You can get an initial QR pack from Venmo for free, and if you need more, you can purchase them for $14.99.

Integrate With Your Website

If you decide to use Venmo as a payment method on your own website, you'll need to get them connected. To get the "Pay with Venmo" button, you'll have to select a payment platform like PayPal or Braintree. You may need the help of a web developer to get it set up and running seamlessly.

Plan Ahead for Tax Time

Understand in advance if you'll need to collect sales tax and how much. You can use a sales tax calculator to estimate what you should be collecting. Venmo will also track how many sales you're making and supply a 1099-K form that shows your income for the year (as long as it's over $600). This is what you'll use when you file business taxes, so be sure to keep it secure.

FAQs About Using Venmo for Business

There are still many variables when it comes to using Venmo for your small business. Here, we've got answers to your most common questions:

Is Venmo Free for Business?

Yes, Venmo is free for business when it comes to creating a profile. There are no setup fees and no recurring or monthly charges. However, you will have to pay transaction fees, which are 1.9% + $0.10 for purchases made through the Venmo app or QR code. For purchases made via your own app or website, you'll pay a higher fee of 3.9% + $0.49.

Is It OK to Use Venmo for Business Transactions?

Yes, it's totally OK to use Venmo for business transactions as long as you have a Venmo business profile. It's free and simple to set up, and once you have it, you can start making transactions right away. You are strongly discouraged from using a personal Venmo account for business transactions.

Can I Set Up a Personal Venmo Account for My Business?

You are required to have a personal Venmo account before you create a business profile. However, it's important to note that you cannot use a personal and business account interchangeably. Your business and personal profiles must remain separate. You can, however, easily switch back and forth between your two profiles from your same login within the Venmo app.

What Is the Difference Between Venmo Personal and Business?

A personal Venmo account is a peer-to-peer payment platform used between individuals for non-business-related transactions. You might use a personal Venmo account to lend money or send a gift to a friend or family member. A business profile is exclusively for use by business owners. Customers pay via Venmo and can take advantage of Venmo's purchase protection.

As a business owner, the transaction fee will be removed from the total amount before the rest is placed directly into your Venmo account. From there, you can transfer the money to your business bank account or business savings. Some transfers are free, but instant transfers will incur a fee.

Contactless payment is here to stay, and it's important that your business is ready to adapt and adjust. Venmo for Business offers a seamless, simple way to start taking payments without credit cards or POS systems required. Take your payment system on the go so consumers can pay wherever your business takes you.